Health care fraud crackdown nets $4 billion

NEW YORK (CNNMoney) -- The government collected a whopping $4 billion last year -- the largest sum ever recovered in a single year -- through its health care fraud prevention and enforcement efforts, according to a new report Monday.

"This is the highest annual amount ever recovered from people who attempted to defraud seniors and taxpayers," the Department of Health & Human Services said in a statement.

HHS and the Justice Department jointly created the Health Care Fraud Prevention & Enforcement Action Team (HEAT) in 2009, with the intention to prevent waste, fraud and abuse in programs such as Medicare and Medicaid.

"Through this initiative, we are working in partnership with government, law enforcement, industry leaders, and the public to protect taxpayer dollars, control health care costs, and ensure the strength and integrity of our most essential health care programs," associate Attorney General Thomas Perrelli, said in a statement.

The agencies said $4 billion was stolen between Oct. 1 2009 and Sept. 30, 2010.

Federal prosecutors opened 1,116 criminal health care fraud investigations and a total of 726 defendants were convicted. 146 defendants were imprisoned, averaging more than three years of jail time.

But the biggest chunk of money collected came not from individual fraudsters but from large drugmakers -- accounting for half of the $4 billion recovered.

Botox-maker Allergan (AGN, Fortune 500), Inc. agreed to pay the government $600 million last year to resolve criminal and civil liability arising from its marketing of Botox for treatment of headaches and other issues that were not approved by the Food and Drug Administration.

Novartis (NVS) agreed to pay $422.5 million to resolve criminal and civil liability arising from the illegal marketing of certain pharmaceutical products.

In April 2010, AstraZeneca (AZN) paid $520 million to resolve allegations that the company marketed the anti psychotic drug, Seroquel, for uses not approved by the FDA and paid kickbacks to doctors.

Tougher rules ahead: In 2011, HHS said the screening process for Medicare providers and suppliers will become tougher "to help keep bad actors out of Medicare, Medicaid and CHIP [Children's Health Insurance]" programs.

Among the new steps: More rigorous screening for providers and suppliers to check for previous fraudulent activity; providers that have been kicked out of Medicare, Medicaid or CHIP programs in one state will be barred from all Medicaid and CHIP programs.

Also, the government will temporarily halt payments to providers and suppliers being investigated for fraud.